Nepal has improved, albeit, slightly as it has been ranked 109th out of 162 countries and territories in the ‘Economic Freedom of the World: 2020 Annual Report’.
According to a press note issued today by Samriddhi Foundation – in conjunction with Canada’s Fraser Institute – Nepal climbed one notch up to the rank from last year’s ranking of 110th. The ranking measures and ranks the economic freedom in five areas; size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business.
According to the report that is based on the data of 2018, Nepal stood at 109th place in the global ranking with an overall score of 6.48. “On a scale of 1 to 10, a higher value indicates a higher level of economic freedom,” according to the report. “Nepal had scored 6.49 last year.”
With a score of 6.53, Nepal had ranked 102nd in 2018.
Hong Kong and Singapore topped the index, continuing their streak as first and second respectively. “New Zealand, Switzerland, the United States, Australia, Mauritius, Georgia, Canada and Ireland were in the list of top 10 performers,” according to the report.
According to the area-wise ranking, the score on the size of government dropped to 6.92 from 7.2, putting Nepal at the 63rd position in the global ranking. “The score on the legal system and property rights, however, went up to 4.64 from 4.6, placing Nepal at the 104th place in the global ranking,” the report reads, adding that Nepal scored 6.89 in access to sound money and remained at the 137th place in the global ranking. “In terms of freedom to trade internationally, Nepal’s score slid to 6.59 from 6.6 and stayed at 111th position.”
Nepal’s score on regulation of credit, labour and business climbed to 7.36 from 7.2 with the global ranking at 71st. Nepal’s immediate neighbour India ranked at the 105th position while China secured its place at the 124th place, according to the report.
The report, based on 2018 data – the most recent comparable data – also warns that recent events in Hong Kong will likely cause its score to fall as data become available for 2019 and 2020. “Intrusion on the rule of law, the foundation of economic freedom, by the Chinese Communist Party is negatively affecting economic freedom in Hong Kong,” said Dr Michael A Walker research chair in Economic Freedom with the Fraser Institute Fred McMahon.
The 10 lowest-rated countries are African Republic, Democratic Republic of Congo, Zimbabwe, Republic of Congo, Algeria, Iran, Angola, Libya, Sudan and Venezuela. Despotic countries such as North Korea and Cuba can’t be ranked due to lack of data. “Other notable rankings include Japan (20th), Germany (21st), Italy (51st), France (58th), Mexico (68th), Russia (89th), India (105th), Brazil (105th) and China (124th),” the report reads.
According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives. For example, countries in the top quartile of economic freedom had an average per-capita GDP of $44,198 in 2018 compared to $5,754 for countries in the bottom quartile. Moreover, in the top quartile, the average income of the poorest 10 per cent was $12,293 compared to $1,558 in the bottom quartile. Interestingly, the average income of the poorest 10 per cent in the most economically free countries is more than twice the average per-capita income in the least free countries.
“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” McMahon said.
The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. It’s the world’s premier measurement of economic freedom, measuring and ranking countries in five areas; size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business.
The report was prepared by James Gwartney, Florida State University; Robert Lawson and Ryan Murphy of Southern Methodist University; and Joshua Hall, West Virginia University. It measures the economic freedom including levels of personal choice, ability to enter markets, security of privately-owned property, rule of law by analysing the policies and institutions of 162 countries and territories.
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